Vietnam promises not to hike rice prices sharply

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Vietnam, the world's second largest rice exporter, will not take advantage of the current food supply strain in the world to increase its rice prices exorbitantly, the national food association said.

The market is now favorable for Vietnamese rice exporters as demand for the grain, especially in Asia, is large, Truong Thanh Phong, chairman of the Vietnam Food Association said in a report in the Thoi Bao Kinh Te Vietnam newspaper Thursday.

"If Thailand raises its prices as expected, it will be an opportunity to increase our prices," Phong said. "But if we sell at very high prices, it will put more pressure on the world food supply and that is not good."

African countries are experiencing a rice shortage while Asia is facing a similar risk, he said. Many countries have asked large rice exporters to refrain from withholding sales to ensure stable supply for the market.

Viet Capital Securities said in a note Monday that news that the Thai government is planning to subsidize rice farmers during the next harvest starting in November could push up the export price of Thai 5 percent white rice to about US$800 a ton from around $550 now.

Thai newspaper The Nation the same day cited the Thailand Development Research Institute as saying Vietnam will substantially gain from the new rice scheme of the Thai government. Stockpiles in Thailand and Vietnam have reached 8 and 2.1 million tons respectively, the newspaper said, without saying where it got the information from.

The Vietnam Food Association has said rice exports may reach a record 7 million tons this year. Phong said the association will make sure local farmers earn profit margins of 30 percent through at least 2015.

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